U.S. new home construction remained robust in January and applications to build jumped to the highest level since 2007 as low mortgage rates and a solid labor market continued to fuel housing demand.
Residential starts slipped 3.6 percent, to a 1.57 million annualized rate, still the second-fastest pace of the expansion, after an upwardly revised 1.63 million pace in the previous month, according to government figures released Wednesday.
January starts exceeded the median estimate in a Bloomberg survey of economists. Permits, a proxy for future construction, advanced 9.2 percent, to a 1.55 million rate — the highest since March 2007.
While the pace of construction eased in January, the figures suggest the housing market remains a bright spot for the U.S. economy amid sluggish business investment.
When paired with continued strength in housing permits, current and planned construction should help mitigate a lean supply of housing.
Mild weather likely played a role in both the December and January readings as warmer temperatures supported construction in months that typically slow homebuilding in areas such as the Northeast.
Single-family starts declined 5.9 percent, to a 1.01 million pace, though permits climbed to a 987,000 rate that was also the highest since 2007.
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Starts of multifamily homes, a category that tends to be volatile and includes apartment buildings and condominiums, edged up 0.7 percent, to the highest level since 1986.
Permits surged 14.6 percent, to a 564,000 pace.